If you’re in a position where practically every penny of your monthly salary is accounted for and the cost-of-living crisis is really starting to bite, you may be worried about making ends meet. Perhaps you’ve already started shopping around for cheaper deals on your broadband, mobile-phone contract, and car insurance, and maybe cancelled your gym membership and a couple of your TV subscriptions. But have you thought about the bill offering the largest potential saving – your mortgage?
What is remortgaging?
Remortgaging involves taking out a new mortgage on a property you’ve already bought. You might do this to replace an existing mortgage deal or to borrow money against your home.
Why consider remortgaging?
Let’s assume a client’s last mortgage came to an end, but they didn’t look for a new deal so they were switched onto their lender’s standard variable rate (SVR). An SVR is usually much higher than fixed and tracker rates, and it can go up at any time.
Research by Habito found 27% of mortgage holders in the UK are currently on their lender’s SVR. They calculated that on an average mortgage, this translates to a mortgage holder paying an extra £340 a month, which means they could almost certainly benefit from remortgaging.
Other reasons to remortgage
Even if you’re not on your lender’s SVR, there are a variety of reasons you might want to remortgage:
- To beat interest rate hikes. As inflation goes up, interest rates are starting to follow suit, so it may make sense to lock into a low rate now.
- You’re coming to the end of a deal. Mortgage advisers generally agree you should start looking for a new deal around three to six months before your current rate ends. However, the research by Habito found 46% of mortgage holders are unaware of this.
- The value of your home has gone up. A significant rise in the value of your home may have moved you into a lower loan-to-value band, meaning remortgaging may give you access to reduced rates.
- You want to borrow against your home. Remortgaging may allow you to raise money cheaply on low rates. Before doing this, it’s worth getting financial advice to make sure this really is the cheapest way for you to borrow.
- You want to overpay, and you can’t on your current deal. If you’ve come into some money recently, remortgaging will allow you to reduce the size of your loan and possibly get a better rate. You’ll need to consider any exit fees or early repayment charges to weigh up whether remortgaging makes financial sense.
Where to start
It’s not always clear cut whether you’ll benefit from remortgaging. A qualified mortgage adviser will look at your circumstances and find out exactly what you want to achieve by remortgaging. For example, are you simply looking to reduce your monthly payments or do you want a more flexible mortgage that allows payment holidays? The adviser will then set out the best options available. Regular mortgage reviews can help ensure you’re never overpaying unnecessarily.
If you’d like to speak to someone about your mortgage, we’re here to help. Call us today on 028 9182 8255 or use or branch finder to find your nearest adviser
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.